About the book
When the stock market crashed on October 19, 1987, the Black-Scholes formula failed, volatility smiles appeared and Elie Ayache started out on the floor of the French exchange for futures and options. Ayache came away convinced that what happened that day cannot be reproduced outside it, whether as a chain of causes and effects or as the output of a random generator. His treatise rethinks derivative pricing and trading technology, and rather than attacking The Black Swan it criticizes the whole category of prediction, white swans and black alike. He draws on philosophers of the event and of contingency, among them Bergson, Badiou, Deleuze and Quentin Meillassoux, to redefine the market against orthodox financial theory.
Nassim Nicholas Taleb welcomed it as a new way of treating Black Swan events, one that reverses the usual view and makes probabilities and expectations secondary constructs used to explain prices.
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This book has 1 recommendation
Nassim Nicholas Taleb (Flaneur)
I am relieved to finally find a book that deals with Black Swan Events in a new way. Ayache brings a reverse-probabilistic perspective: instead of considering that a price is the result of probabilistically derived expectation, he reverses the issues and investigates these artificial constructs as "probabilities" and "expectations" as secondary, derived, fictitious concepts that we bring about to explain prices, decisions, and other things.
This, of course, is just the beginning, so one has to be understanding about the speculative aspect of the effort --so view this as a gutsy look at the "end of probability" and how we will need to envision the world once we get rid of this artificial, antiquated tool. I am also glad to see that those of us trained in the trading of options can have views original enough to influence the philosophy of probability and the philosophical understanding of contingency.
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